Intellectual Property Summary

Intellectual property rights (IPRs) have become synonymous with the debate on generic drug production and trade. After discussions over patent exemptions reached an impasse at the end of 2002 WTO members scrambled to come to some agreement in time for the Cancun Ministerial Meeting. The prospects looked bleak after members missed their deadline for an agreement on developing countries' access to essential drugs. By the end of August 2003, trade delegates supported an agreement that allowed developing countries to import generic drugs for the treatment of diseases that are public health threats.[1] While the agreement is heralded as a success because it addresses a major concern of small developing countries, some criticize the agreement for adding red-tape for developing countries who want to file for a patent exemption.

Agreement on Pharmaceutical Patent Exemptions

The Agreement on Implementation of Paragraph 6 of the Doha Declaration on IPRs enables developing countries to import a generic drug if they can provide evidence of the public health concern, demonstrate the inability of the domestic pharmaceutical industry to produce the drug itself, and prove that it will only use the drug for public, non-commercial purposes. Developing countries are satisfied that the agreement does not limit them to emergency situations or designate only a short list of diseases for which generic drugs can be produced. Instead, it permits them to produce or import drugs to address the particular diseases that affect their countries.

NGOs such as Médecins Sans Frontiéres, Oxfam, and Third World Network have criticized the agreement for adding more bureaucratic burdens to the process of issuing compulsory licenses.[2] These NGOs argue that the obstacles of proof will fall on developing countries who scarcely have the time, money, or other resources to present their case before the WTO. Furthermore, it is unclear how developing countries who want to import generic drugs could prove that their domestic pharmaceutical industry is unable to satisfy domestic demand. The primary concern is that the WTO will only approve import requests from countries that lack domestic industries altogether and reject requests based on the inefficiency of domestic industry. Lastly, the distinction that generic drugs may only produced for "public, non-commercial purposes" is vague and open for contention. Some NGOs argue that it will be impossible to stimulate the production of affordable generic drugs if there is no economic incentives.

The Debate on Relaxing IPRs

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), formed during the Uruguay Round, gives the WTO limited authority to enforce intellectual property rights (IPRs) and obligates member nations to enforce private IPRs. In negotiations to refine the agreement, the US has fought for even more strict enforcement of IPRs. The US argues that IPRs encourage innovation by protecting inventors' right to their creation for a limited amount of time and allowing them to reap the profits that make innovation worthwhile. The US trade representative's firm stance on IPRs seems largely in line with powerful commercial lobbies, such as the pharmaceutical industry. Because of its large lobby power, the pharmaceutical industry has been able influence the WTO agreement that relaxed drug IPRs through the US's negotiating stance. The pharmaceutical industry has traditionally resisted these agreements because it is concerned that vagueness in the language could allow countries to abuse patent exemptions. While the pharmaceutical lobby is quick to defend the right of countries to produce generic drugs for public health reasons, it argues that profitable 'lifestyle' or luxury drugs such as Viagra and weight-loss drugs could be included under patent exemption via loopholes in the wording of the agreement.[3] To assuage these fears, the US introduced a 'public, non-commercial' use clause that WTO members agreed to add, and many developed nations pledged to never use patent exemptions unless in the case of an emergency. Other developed nations with a strong pharmaceutical lobbying force, such as the EU, agree with the US's concerns, but have been quicker to compromise than the US.

A broad spectrum of players argue in favor of loosening intellectual property rights in the interest of increasing global access to patented pharmaceuticals. Especially in light of the African AIDS epidemic, and persisting epidemics of tuberculosis, dengue fever, malaria, and typhoid in other developing countries, it is vital that these countries have access to more affordable drugs. Some also add to this argument that patent protection actually reduces innovation and invention by limiting competition. Many NGOs link the debate over patent exemption to larger divisions between the rich and poor nations, arguing that patent protections reinforce inequality in the world.

Some public health analysts have voiced their concern that the debate on intellectual property rights and public health distracts from more important problems that limit access to health care in developing countries. They argue that to improve public health, developing countries need help improving access to health services, increasing health education, eliminating corruption and inefficiency, and improving sanitation within the country.[4]

Other Controversy surrounding TRIPS

Pharmaceutical patents aside, many countries complain that the TRIPs Agreement unfairly restricts technology transfer and privileges the interests of rich nations over the poor. Some mainstream economists support this view, arguing that the TRIPs Agreement has the potential to reduce global welfare by hampering competition and economic efficiency. Still others protest the moral, economic and philosophical implications of intellectual property rights as they relate to living organisms. Heated controversy surrounds Article 27.3(b) of the TRIPs Agreement, which exempts "plants and animals other than micro-organisms" from patent protection. However, Article 27.3(b) requires members to "provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof." Many non-governmental organizations have sharply criticized the extension of an international IPR regime into the domain of living organisms, noting that such sensitive political decisions are more properly made at the national level through democratic processes.

The Future of IPRs in the WTO

WTO members are on schedule as far as meeting deadlines set by the TRIPs agreement. Developed countries met their 1996 deadline, and almost all the developing nations completed implementation by their deadline, January 1, 2000. As part of implementation, WTO members have established laws protecting various forms of intellectual property, including copyrights, geographical indications, integrated circuit layouts and patents. They also have established formal judicial channels to enforce IPRs and legislated penalties to deter potential violations. WTO members have also created national intellectual property regimes that are controversial in that they involve substantial administrative changes and costs. Least-developed countries, have been granted an extended deadline; they must implement the agreement by 2005, but are exempt from applying patent protection to some pharmaceuticals until 2016.

With the recent agreement on pharmaceutical patents, WTO members have gotten TRIPs negotiations back on schedule, even though the Cancun talks ended prematurely. Technically, the agreement is considered to be an interim solution until WTO members modify the TRIPs agreements and successfully complete the Doha Round. Critics of the agreement will have a chance to improve the terms of the agreement as negotiations continue in Geneva.

IPRs also affect negotiations in agriculture and dispute settlement. The controversy over genetically modified foods and patents on life forms may become a divisive issue as agriculture negotiations progress. Also, recent regional trade agreements have begun formulating their own IPR enforcement rules, making dispute settlement more complicated as the WTO wades through the conflicting, and often vague, IPR regimes. General council meetings are scheduled throughout the first half of 2004 to try to accomplish what WTO members expected to achieve in Cancun. The outcome of those meetings will be a good indicator of how the Doha Round will proceed, and if WTO members will be able to conclude the round by its deadline in 2005.